Developing Corporate Bond Market Terry Koh Shanghai – 27 September 2007

2 Developed Government Bond Market  Benchmark Government Bond Yield Curve  Liquid and transparent pricing  Readily accessible prices – Newspaper, Reuters, Bloomberg, Internet  Extend Maturity : China 30yrs; India 30yrs; Singapore 20yrs ; Korea 20yrs ; Thailand 20yrs; Malaysia 20yrs; HK 15yrs  Primary Dealers to maintain daily 2 way prices to encourage a robust secondary market

3 Corporate Bonds  Should price as a spread of the Government Bond curve- to allow investors to value the credit risk of a corporate bond by isolating the interest rate risk  Well Established Rating Agency – provide a grid matrix with spreads published daily/weekly as a guide for investors and borrowers  Third Party Vendor to provide actual daily/weekly corporate bond prices – create transparency to the investor  Investors - Buy and Hold mentality, should encourage secondary trading  Standardized Pricing – Corporate bond traders internationally use Bloomberg as the standard pricing tool. Most international bonds are published on Bloomberg.  Future Product Development – Credit Derivative to allow hedging of Credit Risk

4 10yr Benchmark Govt Bond Prices – Source Bloomberg